Maersk and Shippers Prepare for Looming Canadian Railroad Strike

Prospects for Canada’s first simultaneous, nationwide railroad strike by the country’s two major freight railroads grew more likely over the weekend causing the shipping liners, freight forwarders, and shippers all to scramble ahead of the action. The mandated cooling-off period is set to expire this week, with the Teamsters issuing strike notices and Canadian National Railway and Canadian Pacific Kansas City each issuing a notice of a lockout for nearly a total of 10,000 union employees as of early Thursday morning.

Traditionally Canada’s two major railroads negotiate their contracts in alternating years reducing the prospects of a crippling strike. There are a broad range of issues in the disputes ranging from the normal wages and benefits to work rules. However, CN has a dispute with the union which alleges the railroad would force employees to relocate around the country to fill labor shortages while CPKC is reportedly in a safety dispute with the union.

With the prospects of a lockout/strike looking Maersk began telling customers that it would stop accepting books for some cargo. Freight forwarded C.H. Robinson also reports that it has begun diverting shipments. The company told Reuters that 80 percent of its customers have switched bookings to export through the ports of Los Angeles and Long Beach while others are moving shipments to Seattle and Tacoma. Robinson told Reuters it expects to move cargo by truck across the border to the U.S.

A nationwide strike would have broad impacts on the Canadian economy. Exports of grains as well as coal, potash, and timber will all cease. Imports of oil and petroleum products will also be impacted with predictions that large backlogs could form at Canada’s major seaports.

A strike is also expected to spill over to impact U.S. seaports as carriers and shippers divert cargo. The Canadian railroads are saying they plan to maintain their U.S. operations The railroads serve many major U.S. hubs and ports such as New Orleans.

Talks are reported to still be ongoing with the union, but reports said the union declared them to be “far apart,” on the key issues. So far, the federal government has not acted to block a strike or order work to resume. The government took a similar position last year when Canada’s west coast dockworkers went on strike saying it prefers settlements at the negotiating table. Prime Minister Justin Trudeau and the government however exerted pressure to get a settlement in the port strike.